Brent crude fell on Monday after Qatari mediators travelled to Tehran, easing fears of further supply disruption. Houthi attacks on Saudi Arabia and a shut Libyan pipeline valve still keep supply risks elevated.
Brent crude fell 2% to $114.39 a barrel on Monday as diplomatic efforts to ease the U.S.-Israeli war with Iran tempered fears of further supply disruptions. U.S. West Texas Intermediate futures dropped 2.3% to $100.88 a barrel.
Qatari mediators head to Tehran
Qatari mediators travelled to Tehran on Sunday to de-escalate regional tensions in coordination with Washington, reports showed. Reuters also reported that senior officials from Saudi Arabia, Turkey and Pakistan were set to meet Iranian counterparts in Tehran on Monday.
The Financial Times reported that Brent had hit $117 a barrel on Friday for the first time since April, amid fears of a fresh escalation that threatens to unleash a new bout of inflation.
Houthi attacks keep supply risks high
Both benchmarks had climbed nearly $3 on Friday after Houthi attacks raised concerns about energy infrastructure in Saudi Arabia, the world's largest oil exporter. Brent settled at $116.72 that day, its highest closing level since April 29.
The attacks continued over the weekend. The Houthis claimed strikes on a Saudi airport and oil facilities on Saturday, and Saudi Arabia said on Sunday it had intercepted additional missiles and drones.
Meanwhile, the Houthis have pushed towards the Bab el-Mandeb Strait, a chokepoint connecting the Red Sea with the Gulf of Aden. Separately, Libya's National Oil Corporation said a pipeline valve linking the Hamada and Tahara oilfields to the Zawiya port had been shut, reducing production at both fields.
Later-dated Brent stays elevated
Prices for later deliveries suggest traders expect elevated prices to persist. Brent for delivery as late as April 2027 traded just under $100 on Monday, according to the Financial Times.
Barclays analysts wrote on Friday that Houthi attacks, tanker attacks and uncertainty after the U.S. midterms imply a "substantial geopolitical premium on oil prices".
Sources: Investing.com, Financial Times
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